Synovus announces earnings for the third quarter 2023

Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended Sept. 30, 2023. “Our third quarter financial results reflect agility and disciplined execution amid complex market dynamics,” said Synovus Chairman, CEO and President Kevin Blair. “While we navigate through this uncertain economic landscape, our primary focus remains on strengthening and growing our core client relationships and strategically positioning Synovus for future growth. This includes efforts to optimize the balance sheet as well as business mix. Our proactive measures taken in the third quarter have further derisked the company by reducing our wholesale funding ratio to 15% and elevating the CET1 ratio beyond 10%, while also streamlining ongoing expenses. We are confidently looking forward to a strong close for 2023, and we are optimistic about the return to a stronger growth orientation as we progress through 2024.”

Third Quarter 2023 Highlights

• Completed the previously announced sales of $338 million of third-party consumer loans and $1.2 billion of medical office building loans as well as the sale of asset management firm GLOBALT to its management team.
• Total revenue of $550.3 million declined $31.9 million, or 5%, compared to the third quarter 2022, driven by net interest income decrease of 7%, partially offset by growth in client fee income, excluding mortgage, of 5% year over year.
• Pre-provision net revenue of $196.8 million declined $91.4 million, or 32%, compared to the third quarter 2022, mostly driven by increases in funding costs, losses on the aforementioned loan sales and restructuring charges related to a voluntary early retirement program.
• Period-end loans declined $673.6 million sequentially, primarily driven by the $1.2 billion medical office building loans sale.
• Total deposits increased $123.5 million sequentially, while core deposits (excluding brokered deposits) grew $431.5 million, as remixing began to slow.
• As expected, credit quality metrics continued to increase from historically low levels and included a net charge-off ratio of 0.61% (driven by the previously disclosed medical office loan sale and a shared national C&I credit), a 3 bps increase in the ACL ratio to 1.22%, and non-performing loan and asset ratios both at 0.64%.
• The preliminary CET1 ratio of 10.13% increased 27 bps sequentially as capital preservation remains the near-term priority given persistent economic uncertainty.

Third Quarter Summary

Balance Sheet

• Total loans ended the quarter at $43.68 billion, down $673.6 million sequentially, primarily driven by the $1.2 billion medical office building loans sale.
• Commercial and industrial (C&I) loans rose $249.7 million sequentially as activity in middle market commercial, Corporate and Investment Banking, and specialty lines contributed to the growth.
• CRE loans declined $899.0 million sequentially, driven by the aforementioned medical office building loans sale partially offset by draws on existing multi-family commitments and continued low levels of pay-offs.
• Consumer loans declined $24.3 million sequentially, largely a result of continued third-party contraction from sales as well as runoff somewhat offset by growth in portfolio mortgages.